Oil import surge widens UK trade gap, but exports also grow

LONDON, Feb 6 (Reuters) - Britain's trade in goods deficit
widened sharply in December on a surge in oil imports, making
the trade gap for last year as a whole the biggest since 2010.

There were signs of a shift in the trade balance in the
final quarter, when the goods deficit narrowed by the largest
amount in three years as export volumes rose at their fastest
since the second quarter of 2013.

But the overall picture remains one of an economy heavily
reliant on domestic demand.

The Conservative-led government's hopes of exports playing a
greater role in the economy have been frustrated by persistent
weakness in the euro zone, Britain's largest export market. That
seems unlikely to change before a national election on May 7.

But there are signs that exporters are being helped by the
fall in the value of the pound in the second half of last year.
Export volumes jumped 2.4 percent in December, the Office for
National Statistics said on Friday.

A survey earlier this week showed British manufacturing
export order growth hit a five-month high in January.

Paul Hollingsworth, an economist at Capital Economics, said
there was an encouraging underlying trend in the export figures
although they were unlikely to show a sharp improvement.

"With sterling around 15 percent higher on a trade-weighted
basis than its 2009 low, and demand in the euro zone still
markedly weak, any further improvement in the trade deficit is
likely to be fairly sluggish."

December's deficit was pushed up by a nearly 40 percent leap
in oil import volumes, reversing a trend of falling imports.

Berenberg economist Rob Wood said the large rise could
reflect a sharp decline in North Sea oil extraction in December
shown in recent ONS estimates. Industrial production data for
December, due on Tuesday, will shed more light on this.

The ONS said the goods deficit grew to 10.154 billion pounds
($15.6 billion) from 9.283 billion pounds in November.
Economists in a Reuters poll had forecast a gap of 9.1 billion
pounds.

In the fourth quarter, the trade in goods shrank by 2.2
billion pounds to 29.4 billion, meaning trade is likely to make
an improved contribution to gross domestic product in the same
period, an ONS official said.

It registered a 0.2 percentage point drag on GDP in the
third quarter.